Ukraine Updates Rules for Reservation of Persons Liable for Military Service and the Criteria for Granting the Status of Critical Importance to the Enterprise

Key points of the Resolution:

• reservations issued by decisions of the Ministry of Economy or through the Portal Diia before 01 December 2024 (the date of entry into force of the Resolution) are valid for the period for which they are issued, but no longer than 28 February 2025
• the criticality periods that are in force on 1 December 2024 (the date of entry into force of the Resolution), but are valid until 30 November 2024 (inclusive), shall be extended until 31 December 2024
• Ministries, state (military) administrations and other state authorities:
  • by 10 December 2024 (ten days from the date of entry into force of the Resolution) to establish its own criteria for determining enterprises that are important for the national economy or for meeting the needs of the territorial community
  • by 28 February 2025 (within three months), to review the decisions on identifying enterprises, institutions and organisations as critically important for the functioning of the economy and ensuring the livelihoods of the population during the special period

Changes to the reservation rules:

• reservation is possible only through the Portal Diia (exceptions are for enterprises and institutions that do not have a USREOU code or the technical ability to submit through the Portal Diia; they submit a list to the state body that has recognised them as critically important
• not more than 50% of the total amount of employees liable for military service is subject to reservation; the quota may be increased above 50% by a separate decision of the Minister of Defence
• employees liable for military service whose accrued salary in each month of the last reporting period (quarter) is lower than the national minimum wage multiplied by a coefficient of 2.5 (currently UAH 20,000 at the rate of UAH 8,000 * 2.5) are not subject to reservation
• the number of persons liable for military service for reservation includes persons liable for military service reserved in accordance with the Reservation Procedure No. 45 of 04 February 2015
  the following persons are not included in the total number of persons liable for military service: women liable for military service and civil servants liable for military service as specified in paragraphs 2-6 of clause 5 of the new Procedure
• the number of employees liable for military service shall be taken into account as of 18 May 2024, in case of an increase in the number – as of the date of submission of the lists, in particular for those formed after 18 May 2024
• reservation and automatic transfer to a special military record is carried out if a person is liable for military service:
  • is registered in the military record
  • is a full-time employee
  • has an accrued salary for each month of the last reporting period (quarter) not lower than the minimum wage in the country multiplied by a coefficient of 2.5 (currently UAH 20,000 at the rate of UAH 8,000 * 2.5)
  • has updated personal data
  • is not on the wanted list
• possibility to cancel the reservation electronically through the Portal Diia.
• the reservation will be cancelled if the person liable for military service has a salary in each month of the last reporting period (quarter) that is lower than the minimum wage in the country multiplied by a coefficient of 2.5 (currently UAH 20,000 at the rate of 8,000 * 2.5).

Changes to the Criteria

• Criteria 4 ‘Importance for the national economy or meeting the needs of the territorial community’ – to confirm the criteria, approval from the Ministry of Economy and the Ministry of Defence is required
• Criteriа 5 ‘Absence of debts on the Single Social Contribution’ – supplemented by the provision on the absence of debts not only on the Single Social Contribution, but also on taxes to the state and local budgets.
• Criteria 6 ‘Average salary’ – for enterprises/institutions, the average salary is calculated for the last calendar quarter and must be at least the national minimum wage multiplied by a factor of 2.5 (currently UAH 20,000 at the rate of UAH 8,000 * 2.5)
• For enterprises/institutions to be considered for criticality, it is mandatory to meet Criteria 5 and 6
• Monitoring of the activities of critical enterprises for the reporting tax period by the authority that made the decision on criticality is introduced

By Yuna Potomkina and Anton Sintsov, Counsels, Asters